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Finance

Luxembourg agrees to help fight tax evasion

Luxembourg Prime Minister Jean-Claude Juncker has announced that his country plans to exchange bank account information with EU countries. The move followed international pressure to curb tax evasion.

Banque de Luxembourg

Banque de Luxembourg, Luxemburg

The new measure would require Luxembourg's banks to exchange information with other EU banks about account holders' interest earnings, according to a statement by PM Juncker on Wednesday.

Luxembourg maintained that the decision, which is to go into effect in 2015, did not stem from recent events which had drawn international attention to tax dodgers.

During EU bailout negotiations in March, Cypriot banks came under scrutiny in part for the many foreign depositors allegedly hiding money there from their own tax collectors. Another scandal surfaced last week when several Western newspapers published leaked information pointing to offshore accounts held by 130,000 prominent figures around the world.

"Decisions of this importance have a preparatory phase that extends back far longer than those two very recent events," Luxembourg’s Finance Ministry said.

"It is the result of a process of reflection and consultation, both with key actors in and outside Luxembourg."

EU leaders demand transparency

The United States, in particular, has urged the tiny EU country to implement the automatic exchange of bank account information. In 2010, Washington enacted the Foreign Account Tax Compliance Act (FATCA), requiring foreign financial institutions to provide US authorities with information about its citizens' offshore accounts.

Britain, Germany, France, Italy and Spain have asked the European Commission to create a similar information exchange mechanism.

"Our financial services sector cannot be cut off from the American market," said Juncker on Wednesday.

The two countries are currently negotiating a deal based on FATCA.

Luxembourg and Austria were the only remaining EU countries resistant to releasing depositors' account details. Soon after Juncker's announcement, Austrian Chancellor Werner Faymann said Austria was also considering implementing a similar measure.

kms/slk (AP, AFP, dpa)